1. Establishment and Development of a National Water and Sanitation Regulatory Authority Regulatory Organizational Structures Presentation to the Review Commission

2. There should be no conflict of interest and wide independence • Option 1: NWSA is not an appropriate institution to be responsible for regulation • Is envisioned by the cabinet resolution 237 • However conflict of interest as long as NWSA is engaged in service provision • Difficult to change the Institution’s existing corporate identity • Option 2: Independent regulator outside MWE is best practice • International best practice • However decision by Parliament is required, which is a lengthy process • Option 3: Regulator within MWE is a weak option • Can be implemented quickly through ministerial decision • However no own legal personality and no independence at all • Option 4: Regional / Local Regulator lead to high operational inefficiency in Yemen • Can be structured according to best practice • In a relatively small country it produces high operational inefficiencies

3. Phasing in approach towards best practice is recommended 2006 2007 2008 2009 2010 Cabinet or Presidential Decree Law approved by Parliament Semi-Independent Independent Water & Wastewater Regulatory Authority National Water & Wastewater Regulator • Would have own legal personality • Would have own revenues • Would report to the Minister and the Service Committee of the Parliament • Dependence would be reduced to the appointment of the Director General and head of Directorates

4. At first the Regulator is a Authority under the umbrella of MWE • Semi-Independent Water & Wastewater Regulatory Authority Water & Wastewater Regulatory Authority Minister MWE EPA NWRA GARWSP NWSA LC • Selection of Director General and Heads of Directorates: • Nomination by Minister for Water and Environment appointment by Cabinet • Candidates would be identified through public advertisement. Ministry will be supported by international recruitment consultant

5. Then the Regulator Commission becomes an independent Organization Parliament or President Parliament Services Committee or Office of the President National Water & Wastewater Regulator • Appointment of Director General and Heads of Directorates: • Nomination by Prime Minister and appointment by President or Parliament

6. A non-political Regulatory Council takes the decisions Water & Wastewater Regulatory Authority - WWRA • Director General • Regulatory Council • Legal Advisor General Services • DirectorateCommunication and Customer Relation • DirectorateService QualityComparative Competitionand Benchmarking • DirectorateAsset and TariffEvaluation

7. External members increase transparency of decisions Composition of WWRA Regulatory Council • Chair: Director General External Members • DirectorAsset Evaluation and Tariffs • Representative ofChamber of Commerce • DirectorComparative Competitionand Benchmarking • Representative of Yemen Standardization, Metrology and Quality Control Organization - YSMQCO • DirectorCommunication and Customer Relation

8. WWRA does Asset and Tariff Evaluation Water & Wastewater Regulatory Authority - WWRA • Director General • Regulatory Council • Legal Advisor General Services • DirectorateCommunication and Customer Relation • DirectorateService QualityComparative Competitionand Benchmarking • DirectorateAsset and Tariff Evaluation

9. Function Assess financial viability Evaluate investment requirements Revise Tariffs Consider transparent subsidy schemes in the framework of Government’s social policy Develop milestones for asset and tariff development Required Staff (5) Director: either Engineer or Economist 1 Planning Engineer 1 Economist / Financial Analyst 2 support staff WWRA will have the power to approve or reject utility tariffs • Directorate: Asset and Tariff Evaluation • The directorate will develop and update a financial model for each utility. • The directorate will give an evaluation of the financial viability on a yearly basis. • The directorate will prepare the material for the decision taking of the Regulatory Council.

10. Service Quality, Comparative Competition and Benchmarking Water & Wastewater Regulatory Authority - WWRA • Director General • Regulatory Council • Legal Advisor General Services • DirectorateCommunication and Customer Relation • DirectorateService Quality Comparative Competitionand Benchmarking • DirectorateAsset and Tariff Evaluation

11. WWRA will enact Economic Regulation • Directorate: Service Quality, Comparative Competition and Benchmarking • Function • Evaluate service performance • Enhance competition • Harmonization of relevant technical, operational and financial rules and regulations • Auditing of drinking water quality tests • Auditing of wastewater analysis • Develop milestones standards and benchmarks • Required Staff (8) • Director: either Engineer or Economist • 1 Operations Engineer • 1 Environmental Engineer • 1 Economist • 4 support staff • The directorate will define, collect and process performance relevant data. • The directorate will compare performance data among utilities and prepare respective reports. • The directorate will develop benchmarks to be decided upon by the Regulatory Council. • The directorate will design auditing procedures. Field work will be outsourced.

12. Communication and Customer Relations is paramount Water & Wastewater Regulatory Authority - WWRA • Director General • Regulatory Council • Legal Advisor General Services • DirectorateCommunication and Customer Relation • DirectorateService Quality Comparative Competitionand Benchmarking • DirectorateAsset and Tariff Evaluation

13. WWRA seeks transparency and follows a consultative approach • Directorate: Communication and Customer Relations • Function • Publishing regular information on WWRA • Publishing regular information on utility performance • Liaise with utilities (“Utility Advisory Committee”) • Liaise with MWE, NWRA, EPA,YSMQCO(“Regulator Coordination Committee”) • Liaise with MoLA and Local Council Service Committees • Liaise with Parliamentary Service Committee • Required Staff (5) • Director: Economist (Marketing) • 1 Journalist • 1 Publishing / Designing Expert • 2 support staff • The directorate will organize the external communication

14. General Services Water & Wastewater Regulatory Authority - WWRA • Director General • Regulatory Council • Legal Advisor General Services • DirectorCommunication and Customer Relation • DirectorService Quality Comparative Competitionand Benchmarking • DirectorAsset and Tariff Evaluation

15. Lean administration • General Services • Function • Manage WWRA’s human resources • Manage WWRA’s finances • Provide office logistic • Manage IT support • Required Staff (7) • Director: Administrator • 1 Accountant • 1 IT Expert • 4 support staff • General Services will provide the administrative infrastructure

16. Service Provider have to Finance WWRA • WWRA will have its own budget • In the beginning it is proposed to share the yearly cost among the regulated organizations as a lump sum according to the financial strength of each organization. • Later a more sophisticated system can be developed

17. A Structure of Formal Interfaces Water & Wastewater Regulatory Authority - WWRA • Regulatory Council • Director General • Legal Advisor General Services • DirectorateAsset and Tariff Evaluation • DirectorateService Quality Comparative Competition and Benchmarking • DirectorateCommunication and Customer Relation • Regulator Coordination Committee • Utility Advisory Committee • Customer Service “Window”

18. Existing regulation and standardization bodies have to coordinate • Regulator Coordination Committee • Function • Development of standards • Report about the institution’s monitoring work • Address specific regulatory problems from each institution’s perspective with the aim to define common positions • Coordinate enforcement mechanisms • Members • WWRA: Drinking water treatment anddistribution and wastewater collection and treatment regulation • NWRA: Water resources regulation • EPA: Environmental protection regulation • YSMQCO: National norms and standards regulation • Can convene on different levels: Head of Organizations or Head of Departments

19. A Structure of Formal Interfaces Water & Wastewater Regulatory Authority - WWRA • Regulatory Council • Director General • Legal Advisor General Services • DirectorateAsset and Tariff Evaluation • DirectorateService Quality Comparative Competition and Benchmarking • DirectorateCommunication and Customer Relation • Regulator Coordination Committee • Utility Advisory Committee • Customer Service “Window”

20. Communication with and among the utilities • Utility advisory Committee: • Function • Harmonization of procedures • Implementation of standards • Discussion of performance benchmarks • Discussion of tariff policies • Other issues of common interest • Members • NWSA • Autonomous NWSA Branches • LCs, • Autonomous Branches of LCs, • Can convene on different levels: Head of Organizations or Head of Departments • For specific issues, such as water quality, also other organizations can be invited: Tanker Service Association, Purification Plants, Small private network operators

21. A Structure of Formal Interfaces Water & Wastewater Regulatory Authority - WWRA • Regulatory Council • Director General • Legal Advisor General Services • DirectorateAsset and Tariff Evaluation • DirectorateService Quality Comparative Competition and Benchmarking • DirectorateCommunication and Customer Relation • Regulator Coordination Committee • Utility Advisory Committee • Customer Service “Window”

22. WWRA will seek feedback of customers (customer protection) • Customer Service “Window” • Function • Allow customer representatives to enter in structured communication with WWRA • Allow WWRA to actively seek direct feedback from customer representatives • Target Group • All kind of formalized or non-formalized customer organizations or customer representatives • WWRA will monitor customer satisfaction

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